Quote from: gmaxwell on November 14, 2013, 09:55:32 PM

Thats not so, blacklisting increases the probability that you receive back blacklisted coins even if you didn't have blacklisted ones going in. This increases the "cost" to you of using this approach, so only outlaws will think it worth the cost, and so you'll only receive outlawed coins while using such a system. It's self-fulfilling once it takes off. I don't think that things that have cost and take effort and which only a tiny fraction of (more likely than usual to be troublesome) users can really move the needle against efforts like this, or at least we shouldn't count on them to.

A blacklist need to have a threshold, otherwise it's meaningless (you could distribute taint to people you don't like, if you happen to have tainted coins). If the percentage of taint is below a certain level, you can't really consider that input as linked to the originally tainted output.

And concerning the fact that most mixers would contain mostly tainted coins, even if that becomes the case, they would still be able to cover tracks.
Let's say a non-violent, honest individual does something perfectly ethical but which governments tend to punish, like, say, not paying taxes, selling cocaine or whatever. If governments manage to identify a particular address as participant in a particular "made-up crime", they'll taint it for that reason. If the said individual mixes his coins enough, even if in the end he gets lots of tainted coins still, the original reason his coins got tainted for is practically lost. Yes, there may still be lots of tainting in his coins, for many different reasons, what indicates with a decent probability that he did something the government does not approve. But you can't really know what. Legally, they can't hold anything on him, other than the fact that he probably tried to cover his money tracks. Yeah, perhaps they can criminalize that with some scary wording like "money laundering". But, well, if wallets do it automatically on the background once in a while, it would be hard to criminalize it.

Also, there would probably be multiple different blacklists. Victims of one particular blacklist have an interest in working together with victims of other blacklists in order to mix their coins. Assuming the place you want to spend your coins block coins from blacklist A but not blacklist B, exchanging your taint from A to B would make you clean.

Further on, from an tyrannical surveillance POV, blacklists don't easily allow a government to know everything you do with your money. Whitelists allow them to track each little spending of yours. When they control your money, they control you.

Anyways, I'm not trying to say that blacklists offer no danger and that people should not try to fight them, quite on the contrary. I'm just trying to point the fact that it's easier to work around them, when compared to whitelists. Mandatory whitelists could render the Bitcoin payment network almost as awful as credit cards. We'd still have an inflation-proof currency, what's great, but the payment network value would considerably decrease.